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WINE INDUSTRY INSIGHT

EMAIL EDITION - VOLUME I, NUMBER 74 - MARCH 16, 2009

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IN THIS ISSUE:

Nickel- And Dime-A-Drink Bills Introduced in California Legislature

Mobius Painter Adversaries To Battle Over Competing Plans

Experienced Voices Address Water-To-Wine Issue

Taxing alcohol by the drink has more lives than a legion of cats, and has come back bigger and meaner than ever with a dime-a-drink tax in the California Assembly and a new nickel tax — disguised as a fee — filed in the Senate.

Beall’s legislation requires funds collected from the new tax be separated from other alcohol taxes and deposited into a new fund for treatment of “alcohol and other drug addictions.”

“The alcohol industry creates devastating problems – traffic accidents, alcoholism – and walks away with money stuffed in its pockets while the public — including non-drinkers — are left to pay billions for the mess,’’ said Beall, D-San Jose, on his web site.

AB 1019 WOULD RAISE WINE TAXES 1,100-PERCENT

Beall said AB 1019 would bring in $1.2 billion in revenue and would raise the tax on:

Distilled spirits to $12.80 per gallon, roughly a 290 percent increase, based on Board of Equalization calculations.

Wine would be taxed at $2.56 per gallon, an increase of more than 1100 percent.

The beer tax would be $1.07, an increase of approximately 400 percent.

ALCOHOL AND TOBACCO — SAME THING

“Taxing tobacco to pay for health costs is now widely accepted,” Beall said. ”In fact, President Obama raised taxes on tobacco to expand children’s health coverage a few weeks ago. Why should alcohol be treated differently?”

DESAULNIER LOW-KEY ON NICKEL-A-DRINK “FEE”

Senator DeSaulnier is playing his legislation very low key, with no mention of SB 558 on his web site — no press release, no news story and no link to the legislation. Other than wrapping his tax in the guise of a fee, his legislation is mostly a re-run of previous bills and would be assessed on “only at the first point of sale
within the state.”

Following a contentious confirmation hearing on the Mobius Painter/Winery Disposition Group (WDG) reorganization plan, U.S. Bankruptcy Judge Alan Jaroslovsky has scheduled a continuation to begin at 10 a.m., March 26 in the Santa Rosa courtroom.

The many responses we received from so many highly experienced people shows how wonderful the Internet is at harnessing collective expertise. Below are the responses. Some were posted as public comments on our earlier article, others came in by email and are reprinted here by permission of the sender.

The responses are presented in the order received.

Michael Crain, Blakeslee & Crain Vineyard Advisors and Brokers

I have two rules of thumb commonly used that may/may not be helpful:

1) Winery water use; 4:1- gallons of water used per gallon of wine produced at the winery. I believe the planning department uses this a a general rule.

2) Water use in the vineyard is much more difficult to estimate due to variables such as:

Crop yields (e.g, Pinot Noir you might only get 2.5-3.0 tons per acre while with Sauvignon Blanc, you may get 7 tons or more.

The amount of water needed per plant will be similar as will the amount of wine produced per ton of grapes); planting density (number of vines per acre).

How well soils drain (soil reservior capacity).

whether frost control is needed or not; the type of frost control (impact sprinklers vs micro spray).

A good farm manager may use a different number, but in general when planning a water system for a more normal situation not needing significant frost protection (in my experience) 1/2 “acre foot” of water (approx 163,000 gallons) per acre of vines seems a common requirement.

But given the differing yields for different varieties, this may not be particularly helpful in determining vineyard water usage per gallon of wine produced. It would seem any such number estimated industry wide, could at best, be a guess. Ag uses alot of water. In the past, California Ag used 85% of all state water resources. Probably still does.

Doug Wiens, Winemaker/Partner,Wiens Family Cellars

1 acre yields about 4 tons of grapes.

Each ton makes about 780 bottles of wine.

Assuming 125 ml per glass, that is 6 glasses per bottle.

So, each acre makes 4 X 780 X 6 = 18,720 glasses.

Water use varies by area & cultural practices, but is roughly 300,000 to 500,000 gallons per acre per year.

So, 300,000 / 18,720 glasses = 16 gallons of water per glass.

16 gallons X 3.785 liters per gallon = 61 liters per glass on the low end, or 101 liters on the high end.

Bottom line is that the Economist is being a bit sensational in its claims, probably by a factor of about 10.

That is equivalent to 170 bottles of wine on the low end to 283 on the high end.

So, take out half of your grass and you can have 3 - 5 bottles more wine each week!

One thing no one ever seems to mention is that water is a renewable resource. How many trillions of trillions of gallons of water are on our extremely wet earth? Why aren’t we investing in reverse osmosis filtration plants to provide us an endless supply of water from the ocean instead of spending a trillion dollars on a war in Iraq?

Art Toy

I think it’s bogus. If you assume it takes 30″ of rain/irrigation per year to raise a crop, and the crop is 5 tons/acre and the wine yield is 165 gallons/ton, that works out to about 50 litres/glass and I bet lots of wineries can tell how much water they use, but I think its a few gallons per case - which would work out to less than one gallon per glass of wine.

Dave, CellarmastersLA.org

This seems about right on first cut: 5 gallons of water per vine per week over 20 weeks is 100 gal of water for 10# of grapes; 3# per bottle, so 30 gal / bottle or over 100 liters per 750ml. And the wineries run at close to 2 gal water per gal of wine just to bump that up a bit.

Joseph Filippi

I was reading the water requirements for “a glass of wine” in the last email. For a small to medium size winery crushing 100 tons a day producing 140 gallons of wine per ton, and irrigating 10 gallons per vine per year in a low yield vineyard (3 tons or less), one liter of water per glass is a conservative number.

Now consider the bigger wineries crushing more per day and that could drop because you only wash your equipment once a day normally. Lets consider doubling that usage my number would be around 2 lters per glass of wine.

Now think, with that I could surmize that at even 4 liters of water per glass of wine, is HUGE, but no way could it ever be 120 liters of water usage per one glass of wine. The purported number of 120 L / glass sounds to me like theatrical reaching.

Julie Nord, Nord Vineyards

325851 gallons/acre foot of water

0.5 acre foot irrigation for Napa vineyards

162926 Gallons per acre water needed

5 tons/acre fruit

32585 gallons water needed per ton grapes

356 bottles wine per ton

92 gallons water per bottle

346 litres water per bottle

462 litres water per litre wine

These are my calculations for the amount of water needed to grow the grapes for each bottle of wine. I had to run the numbers myself because it sound so high. When developing a new vineyard 1/2 acre-foot water per acre of land is needed for Napa grapes. This done not include any water used from the winery. Considering warmer areas may use more water the calculation may not be as far off as it seems.

Ray Krause, Vinificator, www.westbrookwinefarm.com

Lew, just ran our average numbers:

With closely planted 110R and 1103P rootstocks, no till farming and regulated deficit (drip) Irrigation we use approximately 165,000 gallons of irrigation water to produce 9,950 (125 ml) glasses of our Fait Accomplior about 16.6 gallons per glass. If 120 liters is 31.69 gallons.

Where in the world would we use another 150,000 gallons of water and who in the hell would fill a wine glass with only 125ml, anyway?

D.G. Blackburn, American Distilling Institute

This fact is most likely true, if not larger.

During production for example you clean and sterlize the equipment. Several times you might rinse the area, and partially rinse, clean the grape holding bins
remember this is just crush.

Afterwards you sanatize all equipment with cleaning agents and then again rinse
remember this is just crush.

Followed by fermentation,

Pressing the fruit,

Prep the barrels,

Maturation,

Empty the barrels wash, clean and rinse,

Bottling.

At each step along this path towards the actual finished bottle of wine hundreds of gallons if not thousands were used depending on the winery size and awareness of the crew during production

Yes I could see how this small fact could possibly overall contribute to wasted water.